How Economists View the Rise of Artificial Intelligence

Machine learning will drop the cost of making predictions, but raise the value of human judgement.

To really understand the impact of artificial intelligence in the modern world, it’s best to think beyond the mega-research projects like those that helped Google recognize cats in photos.

According to professor Ajay Agrawal of the University of Toronto, humanity should be pondering how the ability of cutting edge A.I. techniques like deep learning—which has boosted the ability for computers to recognize patterns in enormous loads of data—could reshape the global economy.

Making his comments at the Machine Learning and the Market for Intelligence conference this week by the Rotman School of Management at the University of Toronto, Agrawal likened the current boom of A.I. to 1995, when the Internet went mainstream. Gaining enough mainstream traction, the Internet ceased to be seen as a new technology. Instead, it was a new economy where businesses could emerge online.

However, one group of people refused to call the Internet a new economy: economists. For them, the Internet didn’t usher in a new economy per se, instead it simply altered the existing economy by introducing a new way to purchase goods like shoes or toothbrushes at a cheaper rate than brick-and-mortar stores offered.

“Economists think of technology as drops in the cost of particular things,” Agrawal said.

Likewise, the advent of calculators or rudimentary computers lowered the cost for people to perform basic arithmetic, which aided workers at the census bureau who previously slaved away for hours manually crunching data without the help of those tools.

Similarly, with the rise of digital cameras, improvements in software and hardware helped manufacturers run better internal calculations within the device that could help users capture and improve their digital photos. Researchers essentially applied calculations to the old-school field of photography, something previous generations probably never believed would be touched by math, he explained.

As people “we shifted to an arithmetic solution” to help improve digital cameras, but their cost went up as more people wanted them, as opposed to traditional film cameras that require film and chemical baths to produce good photos, he added. “Those went down,” said Agrawal, in terms of both cost and want.

Artificial Intelligence and the future | André LeBlanc | TEDxMoncton

All this takes us back to the rise of machine learning and its ability to learn from data and make predictions based on the information.

The rise of machine learning will lead to “a drop in the cost of prediction,” he said. However, this drop will result in certain other things to go up in value, he explained.

For example, a doctor that works on a patient with a hurt leg will probably have to take an x-ray of the limb and ask questions to gather information so that he or she can make a prediction on what to do next. Advanced data analytics, however, would presumably make it easier to predict the best course of remedy for the doctor, but it will be up for the doctor to follow through or not.

So while “machine intelligence is a substitute for human prediction,” it can also be “a compliment to human judgment, so the value of human judgment increases,” Agrawal said.

In some ways, Agrawal’s comments call to mind a recent research paper in which researchers developed an A.I. system that could predict 79% of the time the correct outcome of roughly 600 human rights cases by the European Court of Human Rights. The report’s authors explained that while the tool could help discover patterns in the court cases, “they do not believe AI will be able to replace human judgement,” as reported by the Verge.

The authors of that research paper don’t want A.I. powered computers to replace humans as new, futuristic cyber judges. Instead, they want the tool to help humans to make more thoughtful judgements that can ultimately improve human rights.